A guide to going solar in multifamily housing
With high energy use, millions of large, unshaded rooftops ripe for solar systems, and plummeting renewable energy prices, the multifamily building sector in the U.S. has great potential for solar energy production and consumption.
Even in a state without many incentives to make the switch, going solar can increase property values, result in a more stable operating budget, reduce expenses, and improve a building’s attractiveness to tenants according to the N.C. Clean Energy Technology Center. Multifamily properties tend to have established, long term owners who would benefit from the ROI. Though unlike a residential home, adding solar to a multi-family building can be complicated with multiple meters and shared roof space.
So, how can property owners, managers, condo owners, and even renters gain access to the savings and stability associated with renewable energy?
Opportunities for multifamily property owners & managers
Battery storage technology. Battery storage technology combined with solar PV can be a great option for owners and managers. A solar + storage system can virtually eliminate demand charges, which are fees that utilities charge commercial customers based on their highest peak power use during a billing period, sometimes amounting to half of a utility bill. A report from the Clean Energy Group states that the solar + storage combo reduces demand for grid power, lowering peak use. This can result in electricity bills of close to zero for affordable housing owners in states like California. Plus, low-income building owners can achieve as much as 99% on annual electricity bills, nearly double to what solar panels alone can provide.
Solar battery systems empower owners of solar PV systems to take control of the energy they produce and when they consume it. As many utilities try to roll back solar incentives, like net metering, which lets solar-powered buildings sell their surplus energy back to the grid, these systems can preserve value in a changing policy environment. On top of that, solar + storage can easily kick in when the grid goes down and only add about a third to the cost of stand-alone solar.
Solar water heating. Solar water heating systems heat the water that residents use at a significant discount compared to gas or electricity. According to ENERGY STAR®, Solar water heating is one of the most efficient ways to reduce a building’s carbon footprint, and more cost-effective than installing PV for buildings that use central water heating.
Active solar water heating systems include pumps that circulate water or a non-freezing heat transfer fluid (popular in colder climates). Passive solar water heating systems, on the other hand, are typically less expensive than active systems, though not as efficient, and almost always require a backup system for cloudy days and times of increased demand.
Renewable energy procurement. Energy procurement helps lower the cost of energy and stabilize NOI by allowing buyers to lock-in competitive prices. Energy is deregulated in about half of U.S. states, meaning building owners and property managers can choose who supplies their energy and what type of energy they’d like to purchase, including renewable options. While renewables can be slightly more expensive than natural gas, costs have come down significantly in the past few years. A good energy broker should investigate the types of renewable energy you’re interested in, analyze those costs across your portfolio, and help you take advantage of favorable rates.
Community Solar. Community solar is another option for obtaining energy from renewable sources without installing a PV system. It allows individual units or building owners to buy into a community solar array that serves their area, often with a portion of the system’s energy production credited to their electricity bills. The arrays are usually operated by a third party, such as a utility or non-profit, who covers the cost of building the system, and upfront costs are generally very low.
Solar PV. On top of individual units, multifamily rooftops can prove to be valuable real estate space. Solar PV systems, or rooftop solar, can be sized to power a portion of a building’s electricity use, offset common space usage, or provide power for electric vehicle charging stations. While they can significantly reduce energy costs, it’s important to note that solar panels alone do little to offset demand charges.
Whether a building is master or separately metered, the easiest option for going solar in a multi-family community or a condominium is to use a solar PV system to offset electricity usage in common spaces, which benefits all participants in the building. For condominiums looking to go solar, the cost of the system can be rolled into the condo fee or financed by the condo association.
Opportunities for tenants: don’t lose hope!
Many apartment occupants, whether they rent or own, are prevented from doing going solar since they lack the capability to install PV systems on the owner’s property. Renters face further barriers of connecting to solar power since they may not remain tenants for a sufficient amount of time to recoup their costs.
Talk to your landlord. While it’s something you can always bring up to the building owner or manager, it’s important to understand how your building is metered. Some multi-unit buildings are master-metered, where the owner pays all of the electricity costs for occupants. While this arrangement creates a split incentive with regards to energy conservation measures, there’s incentive for building owners or managers to install solar. Tenants who own their apartments in units that are separately metered, and have approval to install solar on the building, can connect a system to their electric meter, or to select apartments.
Community solar. Another way for tenants to go solar? States like Massachusetts allow renters and owners to connect to a community solar array with little upfront costs and lowered energy bills each month. Moreover, many programs allow customers to transfer their benefits if they move to a new apartment or home within the program’s district.
Install a system. Individual condo owners can connect a solar system to the electric meter of their unit, allowing them to reap the rewards with little impact on non-participating units. The downside? Only certain units will benefit from the solar system installed on a shared roof, making it critical to learn about procedures for going solar within a condo and educate decision-makers about the benefits.
Are you ready to go solar? Whether you’re a property owner, manager, or tenant, it’s important to think about your needs, the ROI, as well as upfront costs. As regulatory frameworks around renewable energy continue to shift and utility rates remain volatile, renewable energy options can offer some stability, energy autonomy, and cost savings. While choosing renewable energy is important, a strategy focused on both energy efficiency and renewables is the key to an optimal, low-cost energy future for your business and the world.
Did you know that you can track your solar electricity use and production in WegoWise?